Falling house prices 'would not deter' investors

19 March 2004

More than 90 per cent of buy to let investor landlords would keep their investment properties should house prices fall, a new survey claims.

Research conducted by the Association of Residential Letting Agents (ARLA) found that most landlords see themselves as holding their investments for the long term. Nearly two thirds of buy-to-let investors expected to maintain their property investments for more than ten years, while over a quarter expected to keep their properties for more than 20 years, ALRA reports.

The study also found that landlords believe the most common reason for renting is the inability to buy, which they said accounted for 44 per cent of their tenants. Preferring the flexibility (22 per cent), not wanting the responsibility of home ownership (18 per cent) and working away from home (17.3 per cent) were also given as reasons for renting.

Nearly four out of ten of the 600 landlords surveyed held just one investment property, 42.3 per cent had between two and five properties, ten per cent between six and ten and 7.8 per cent reported having more than ten properties in their portfolios. The average buy to let portfolio averaged 5.5 properties.

Asked about the proportion of their mortgage borrowings, nearly two-thirds of landlords had borrowed less than 76 per cent of their investments and the average loan to value ratio was 59 per cent.

Commenting on the findings, Robert Jordan Frics, president of ARLA, said: "These figures totally reject propositions contained in some recent reports that future house price falls could impact on the buy to let market. Obviously, investment landlords understand that people have to live somewhere and should there be a housing problem they are as likely, if not more likely, to rent as to take any other form of tenure."

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